Judge Shreds Uber; Says Company Can’t Prove Riders Are Giving Up Right To Sue

Uber, like a large and growing number of companies, has a clause in its terms of use that prohibits customers from suing the company or joining together in any sort of class action against the ride-hailing service. However, a federal judge recently scolded Uber over this contractual gamesmanship and deemed this particular clause unenforceable because the company can’t prove that users actually agreed to these terms.

Last December, an Uber user filed a potential class-action antitrust lawsuit against Uber founder and CEO Travis Kalanick over the way in which his company sets prices. After previous unsuccessful efforts to have the case dismissed, Kalanick successfully had Uber brought in as a co-defendant in the case. Then Uber asked the court to force the lawsuit into binding arbitration as required by the company’s terms of use.

That arbitration clause not only allows Uber to force the customer out of the courtroom and into private arbitration — where damages are limited, no precedents are set, and the arbitrator’s decision is final even if a glaring error is made — but also bars multiple customers from entering arbitration together as a class action. Thus, every individual Uber user would need to go in to arbitration on his/her own.